Executives must ask if the world is better off because their business is in it: Paul Polman

Paul Polman, Author and Former CEO, Unilever

Paul Polman works to accelerate action by business to achieve the UN Global Goals, which he helped develop. He was the CEO of Unilever from 2009 to 2019. He is also the co-author of Net Positive: How Courageous Companies Thrive by Giving More Than They Take. In an interview with Forbes India, he points out the need to look beyond traditional CSR and make sustainability a core part of the business strategy.

Q. There has been a spurt in sustainability initiatives in recent years. What’s your perspective on the scale and speed of such efforts?
You are absolutely right that there has been an increase in the number of companies working to improve their impact on the world. The World Economic Forum recently surveyed 12,000 business leaders around the world on the biggest risks facing their companies over the next decade, and six of the top ten threats they worry about relate directly to global warming and the destruction of natural ecosystems. Thousands of companies and financial institutions have introduced, or are committed to introducing, decarbonisation targets aligned with best science, representing over a third of the global economy and rising. In some cases, companies are moving much faster than governments; Infosys, for instance, achieved carbon neutrality in 2020, which is decades ahead of most national targets. Also, industry was instrumental in securing the new international targets to reverse nature loss by 2030, which were agreed in Montreal at the COP15 summit in 2022.
 
But you are also right that the issue is speed and scale. More companies are finally moving towards business models which better serve people and the planet, but clearly as a whole we are still not moving fast enough. Two of the most urgent problems facing humanity are climate change and widening inequality. Our problems are moving faster than we are collectively applying solutions. So we need to accelerate. This is why we wrote Net Positive, to help mobilise more executives and more companies, so that we can begin to tackle these problems with critical mass.
      
Q. People. Planet. Profit. What’s the balance a responsible business should ideally maintain?
I actually wouldn’t talk about keeping profit and environmental and social sustainability ‘in balance’, as this perpetuates the wrong idea that business success and sustainability are somehow competing interests. Great companies drive value as a result of putting themselves in service of people and planet, not in spite of doing so. It’s not about choosing between profit or purpose, it’s about delivering profit through purpose. Shahi Exports, India’s largest apparel manufacturer and exporter, is a great example: The leadership cares deeply about hiring and training its female workforce, and has made this core to the company’s raison d’etre, and doing so makes the business more productive.
 
At Unilever, we were clear that our purpose is to make sustainable living commonplace. We put this at the heart of our brands and adopted a long-term, multistakeholder model, in which we worked to serve all our stakeholders and also Planet Earth and future generations. We moved away from thinking only about the next quarter and instead focussed on innovation and on creating fantastic products. We built trust and loyalty, which is why we were repeatedly voted a top place to work. Top line growth grew, bottom line growth grew, and, over the ten years I was CEO, our shareholders saw a 290 percent increase on their returns.

Also read: How can companies better meet their sustainability goals?
 
Q. Why is it crucial to be ‘Net Positive’ in the present times?
Net Positive is inspired by the realisation that traditional CSR, no matter how well-intentioned, doesn’t take us far enough. A few sustainability initiatives, a bit of philanthropy, some nice metrics in your annual report—it won’t move the dial. Instead, we need an approach which makes sustainability a core part of the business strategy. This is something long been argued by my good friend Natarajan Chandrasekaran, who rightly says ‘sustainability is not a buzzword’, and that what’s good for India is good for Tata.
 
If CSR is about being “less bad”, Net Positive is about having a truly positive impact. These are the companies striving to take ownership of all the negative consequences which flow from their activities. They operate for the long-term benefit of business and society, and partner with others to tackle big, systemic problems. It’s a mindset more than anything: Net Positive leaders are courageous, ambitious and collaborative. No company in the world is yet fully Net Positive, but a growing number are headed this way. We advise any executive thinking about where their company is on the journey to start with an honest answer to a simple question: Is the world better off because your business is in it?

 
Q. What were some of the challenges you faced at Unilever?
One of the biggest challenges was that the risks and costs of inaction were not yet clear, so we had to spend a lot of time convincing people and proving the strategy, especially in the financial markets. It also took a great deal of energy to show people the connection between environmental sustainability and social sustainability. Your company can have the best carbon reduction target in the world, but if you are not paying living wages, or working to end child labour, or to support democracy and truth, you are only doing half the job.
 
Q. What can companies do differently to decarbonise their value chain?
This is a really important question. Up to 90 percent of an organisation’s environmental impact lies in the value chain, either upstream in the supply chain or downstream, for example when the products are used. It’s simply not ok for a business to pretend these impacts are someone else’s fault or problem. You can outsource many things, but not your responsibilities.
 
Successfully decarbonising across the value chain has to be a collaborative effort. We are working with some of the biggest global players in the food and agriculture industry to help reduce harmful emissions and scale regenerative farming practices. Through The Fashion Pact, which represents about a third of the global industry, we are getting fashion companies to work together to create a market for low impact cotton and other materials. In both of these initiatives, we are working extremely hard to partner with farmers right from the beginning.

Also read: Does it pay to link executive compensation to ESG goals?
 
Q. How do you perceive the power of partnerships, especially in an economy like India?
Unfortunately we are at a moment when global solidarity is weak. But we can’t give up. So a lot of our work with the global private sector is to help companies work in these broader coalitions. We were all pleased to see India use its Presidency of the G20 to put an emphasis on collective action. FICCI has led a number of initiatives aimed at driving more sustainable and equitable growth, which is beginning to be reflected in national policies.
 
Many around the world see India as a bridge between developed and developing economies, and many are truly in awe of what Indian companies are achieving, both at home and abroad. Time and time again we hear this being called “India’s decade”, and for good reason. Yours is a story of growth, innovation, ambition, investment, renewal, youth. Given the size and influence of India’s economy, that’s a strong position to be in, and with size and strength comes responsibility. When India’s business leaders are seen to actively build fairer, more inclusive businesses and cleaner, greener growth, it means a lot, and others undoubtedly follow.        
 
Q. Degenerative to regenerative business models—what’s the leadership mindset needed to drive such shifts?
Mahatma Gandhi once said, ‘If we could change ourselves, the tendencies in the world would also change…We need not wait to see what others do.’ The greatest leaders understand that the change of systems is really a story of human change. In the book, we talk about Net Positive leaders having a strong sense of their own purpose, as well as empathy and humility. Anand Mahindra is a great example. He says the company should think differently, accept no limits and drive positive change, and he personally embodies all of these traits, and so can inspire this behaviour in others. Net Positive leaders have the courage to do the hard right over the easy wrong. For instance, former Merck CEO Ken Frazier took on the former American President and resigned from his position from American Manufacturing Council, after Donald Trump publicly defended white supremacists.